April 10, 2009
US soy trade may be volatile through summer
The USDA's recent World Supply and Demand report could likely trigger a renewed volatility in the US soy trade from now through the summer.
The report lowered world soy production by 4.5 million tonnes from a month ago to 218.8 million tonnes, largely due to continued poor harvest returns in Argentina. The bulk of the decline - four million tonnes of it - comes from Argentina as the country's crop is now seen at 39 million tonnes.
Despite rain in much of Argentina's main growing area in early March, hot, dry conditions returned in most of the country, leaving yield prospects below last month, according to the report.
As a result, the USDA increased its price forecasts for soy and soy products. The new price range for soy is now US$9.25 to US$10.05 per bushel, compared to the US$8.85 to US$9.85 range a month ago. Soymeal prices are also projected to reach around US$280-US$300 per tonne.
The lower world soy stocks could cause volatility in the US soy trade for the near future, analysts said.
Don Roose of US Commodities said the demand table is now tightened, and demand that usually shifts to South America later on in the US growing season will likely stay in place for the US, which will tighten the already tight demand, making it an increasingly volatile market.
